Status: 04/05/2023 4:23 p.m
The banking industry remains unsettled. The people in Munich were all the happier: BayernLB has almost doubled its profit. But the restructuring of the Landesbank is not yet complete.
BayernLB is in very good shape again. Last year, she earned over a billion euros net. This is the highest profit since the outbreak of the banking crisis in 2008, which at the time also plunged the Landesbank into a crisis that threatened its existence. She was rescued in dire need by the Free State of Bavaria, which quickly provided ten billion euros.
“Banking crisis an encapsulated topic”
The emergency takeover of Credit Suisse by the Swiss competitor UBS and the rescue measures for the Silicon Valley Bank in the USA are currently evoking memories and comparisons with the Lehman bankruptcy in 2008.
As a result, BayernLB had to undergo a massive drastic cure. Divisions such as the GBW housing association were sold, worthless real estate securities from the USA were transferred to an in-house bad bank and processed, and international business was drastically reduced. The whole bank shrank, thousands of employees had to go. Credit Suisse did nothing of the sort. She didn’t need to be rescued by Switzerland and carried on as usual.
Credit Suisse’s problems are self-inflicted, BayernLB boss Stefan Winkelmeier resists any comparison. There are also no parallels with the American specialist bank for start-up companies Silicon Valley Bank: “I would say it is an encapsulated issue for a few banks and less of a phenomenon in terms of structure and total.”
Business model with three pillars
BayernLB, which has been completely renovated, not only earned a good one billion euros net last year, it also has a lot of equity. At over 17 percent, the rate is more than twice as high as required by the banking supervisory authority. The Landesbank has not yet fully completed its restructuring, Winkelmeier admits. But the final steps will be taken this year. The business model is based on three pillars.
The Berlin online bank DKB stands for the private customer business of the Landesbank. With 5.3 million customers, it is currently the second largest direct bank after ING. The goal of increasing the number of customers to eight million by next year was abandoned. Nevertheless, the DKB must grow and work more profitably, demands Winkelmeier. He ruled out a sale, which is always being speculated about. It makes no sense to want to sell a bank in the current situation.
DKB is benefiting from the interest rate turnaround by the ECB and the massive increase in capital market interest rates. It was able to increase its net interest income from EUR 1 billion to EUR 1.3 billion.
Less real estate deals, more gold trading
There are similar effects in the second business area “Real Estate & Savings Banks/FI”. Here, net interest income improved from EUR 363 to 396 million. At the same time, however, fewer real estate transactions are being concluded. The precious metals business is also part of this division. Gold trading turnover reached a new record of 85 tons.
The “Corporates & Markets” division intends to focus more on sustainable financing. BayernLB sees itself as the most important regional financier for wind power, solar and water energy – also in cooperation with the Bavarian savings banks.
Despite some disadvantages, Landesbank boss Winkelmeier welcomes the turnaround in interest rates by the European Central Bank. In view of the high inflation, there is no way around further increases. The economists at BayernLB are forecasting an inflation rate of six to seven percent for the current year.